The economic recovery: Resized and reshaped

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Winning the battle, losing the war

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The economic recovery


When it was last this size, Britain’s economy looked very different

ON JULY 25th, more than six years after the great recession began, official data confirmed that Britain’s economy is finally bigger than its previous peak. The recovery has been slow, with Britain bringing up the rear of the G7 (of that group only Italy’s economy is smaller than it was in 2008). And the economy emerges in a quite different shape. During six years in the doldrums, some industries have dwindled while others have burgeoned. Economic heft has shifted from workers to firms.
Between 2008 and 2009 sterling depreciated by 25%, leading economists to predict an export boom. George Osborne, Britain’s chancellor, foresaw a “march of the makers” as manufacturing firms kicked into action. All such predictions were off: exports are flat, while manufacturing and construction output are far below their 2008 levels (see chart 1). The idea that Britain would “rebalance” away from …

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